Okay - so the issue here is just that by default, the Encrypt and Decrypt commands clear the field with the password.
You can include the /clear=no parameter to prevent this - of course, this means the password will be in the XML when it is saved (in your sample form) - so you may want to leave your Decrypt rule as is, or you may want to clear the password field with another rule. But if you just add /clear=no to your Encrypt command, you should see the results you wanted. Attaching your form with this change made.